NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Legal Structure of Mutual Funds in India
Which of the following is the primary function of the custodian of a mutual fund in India?
The custodian safekeeps the securities belonging to the mutual fund schemes and tracks corporate actions like dividends, bonuses and rights. It does not set investment objectives, approve advertisements, or appoint trustees, which are functions of the AMC, trustees and sponsor.
- ASafekeeping the securities of the schemes and tracking corporate actionsCorrect
- BSetting the investment objectives of each scheme
- CApproving the advertisements issued by the AMC
- DAppointing the trustees of the fund
Explanation
The custodian holds the securities of the schemes in safe custody and tracks corporate actions such as dividends, bonus and rights. Investment objectives are set by the AMC and approved by trustees, and trustees are appointed by the sponsor.
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